Top US stocks to watch: Tesla, Hasbro and Lockheed Martin

Tesla reports after the markets close today, Hasbro beats expectations as its entertainment unit bounces back, Lockheed Martin raises its guidance, Aon and Willis Towers abandon their merger, and Chinese education stocks are under pressure amid regulatory changes.

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Tesla

Tesla headlines the earnings calendar today and is due to release second quarter results after the markets close, with analysts expecting significant growth in revenue and earnings.

As with any automobile manufacturer in the current environment, traders will be keen for an update on how Tesla is navigating the global semiconductor chip shortage that has derailed many of its competitors. Early indications are that Tesla has navigated the chip shortages well, with the company reporting earlier this month that it delivered 201,250 cars to customers in the quarter. Nonetheless, the company’s outlook for production moving forward will be a key non-financial metric to monitor.

The consensus shows analysts are expecting revenue of $11.47 billion, adjusted EPS of $0.93 and GAAP EPS of $0.53.

You can read our full preview ahead of Tesla’s results here.

Hasbro

Toymaker Hasbro reported stellar growth in revenue and earnings during the second quarter, and said it is confident it can continue to deliver double-digit topline growth this year.

Revenue jumped 54% to $1.32 billion and came in well ahead of the $1.16 billion expected by analysts. Adjusted net earnings per share soared to $1.05 from just $0.02 the year before. Notably, consumer product revenue rose 33% and its entertainment segment, home to the likes of Peppa Pig, increased 47%. The biggest improvement came from its digital gaming business, which saw revenue jump to $406.3 million from only $186.7 million the year before.

‘Wizards continued to generate outstanding results behind a compelling analog and digital release schedule for MAGIC: THE GATHERING. Consumer products revenue increased as demand remains robust for Hasbro toys and games and entertainment revenue grew as we are producing entertainment with strong deliveries,’ said Hasbro chairman and chief executive Brian Goldner.

Lockheed Martin

Lockheed Martin reported growth in revenue and earnings during the second quarter but narrowly missed expectations because of a hefty charge booked due to ‘performance issues’ in its Aeronautics division – the largest in the business.

Net sales rose to $17.00 billion from $16.2 billion the year before and net earnings of $6.52 rose from $5.79 the year before. That included a $225 million loss from a failed classified project in Aeronautics. Excluding that loss, EPS would have been around $7.13. Analysts had expected EPS of $6.53.

The weapons and defence company left its revenue guidance for the full year unchanged at between $67.3 billion to $68.7 billion but raised its EPS target to $26.70 to $27.00 from its previous range of $26.40 to $26.70.

Philip Morris

Tobacco giant Philip Morris has set itself a hugely ambitious goal to stop selling all cigarettes in Britain within the next 10 years, demonstrating the confidence it has its next-gen products of e-cigarettes and heated tobacco pens.

Chief executive Jacek Olczak told the Daily Mail newspaper that this will see its iconic Marlboro brand phased out in the country. Notably, the goal roughly aligns with the country’s plan to go ‘smoke-free’ by 2030.

Aon and Willis Towers

Insurance brokers Aon and Willis Towers Watson have abandoned their plans to complete a $30 billion merger that was agreed back in March because the pair couldn’t see a way of convincing US officials.

‘Despite regulatory momentum around the world, including the recent approval of our combination by the European Commission, we reached an impasse with the US Department of Justice,’ the pair said in a statement. ‘The DOJ position overlooks that our complementary businesses operate across broad, competitive areas of the economy. We are confident that the combination would have accelerated our shared ability to innovate on behalf of clients, but the inability to secure an expedited resolution of the litigation brought us to this point.’

The DoJ took action back in June and argued the deal would lead to less competition and potentially higher prices. Aon will need to pay Willis Towers $1 billion in termination fees as a result.

PerkinElmer

PerkinElmer, the maker of detection, imaging and informatics devices used for scientific research, announced its largest ever acquisition with plans to buy antibody and reagent leader BioLegend for $5.25 billion in cash and shares as it posted second-quarter results.

The company said the deal will close by the end of the year. BioLegend is expected to report $380 million in annual revenue in 2022 and PerkinElmer intends to expand its existing life science franchise into new segments once it is completed.

The news came as PerkinElmer reported a 51% jump in second quarter revenue to $1.22 billion with organic growth of 41%. Adjusted EPS rose to $2.83 from $1.57. PerkinElmer expects third quarter revenue of $1.0 billion and adjusted EPS of $1.62. For the full year, it is aiming for adjusted revenue of $4.57 billion and adjusted EPS of $9.88.

TSMC

Chip giant Taiwan Semiconductor Manufacturing Co (TSMC) said it is still considering whether establishing manufacturing sites in Germany is feasible, but said the idea is still in the ‘very early stages’.

The European Commission has been talking to the likes of TSMC and other chipmakers like Intel about establishing semiconductor plants in Europe amid the global supply shortage. TSMC signalled earlier this year that it was looking to expand in the US and Japan in order to diversify from Taiwan.

‘We are currently doing reviews on Germany seriously, but it's still in very early stages,’ said TSMC chairman Mark Liu at the company’s annual general meeting. ‘We continue to communicate with our major clients in Germany to see whether this is most important and effective for our clients’.

Boeing

European airline Ryanair has hinted it is willing to place a large order for some of Boeing’s MAX 10 aircraft this year, but only if the price is right.

Ryanair is Boeing’s largest customer in Europe and released quarterly results earlier today. Chief financial officer Neil Sorahan said Ryanair could be looking to place the order ‘maybe the back end of the year’ but said it is ‘all predicated on price’.

Any new planes would not be delivered until after the end of the 2026 financial year, when its existing orders end. Any order would provide a boost for Boeing and its MAX planes, which have previously been grounded over safety fears following two fatal crashes.

TAL Education and New Oriental Education

Chinese education stocks suffered heavy falls on Friday after China announced a ban on for-profit companies from providing tutoring services in core subjects in an attempt to lower the cost of bringing up a family and to encourage them to have more children.

The news is catastrophic for the industry, demonstrated by the fact TAL Education has lost over 70% in value since the news broke while New Oriental Education has shed around two-thirds of its value. Both stocks warned over the weekend the development would hurt their businesses.

Duolingo

Language-learning app Duolingo has raised its price target ahead of its initial public offering, signalling strong appetite for the stock.

It said it plans to sell 5.1 million shares between $95 to $100 each, ahead of the previous range of $85 to $95. At the top-end of that range, Duolingo could raise up to $511 million and earn a valuation of over $4.6 billion. Notably, about 1.4 million of those shares will be sold by existing investors.

Duolingo has around 40 million monthly active users.

PropertyGuru

Singaporean property portal PropertyGuru is set to go public by merging with SPAC Bridgetown 2 Holdings in a deal that will value the firm at around $1.78 billion.

The deal should raise around $431 million for the combined company, which will be listed on the NYSE. PropertyGuru predominantly operates in Singapore but has expanded into other parts of Asia including Vietnam, Indonesia, Malaysia and Thailand. Bloomberg reported it is the third largest real estate marketplace in the whole of southeast Asia.

The deal should be completed late this year or in early 2022.

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